Viewing entries tagged
wealth management

Living longer...Working longer.

The average age at which an American worker retires is now reported to be 62 and that's the highest self-reported average age in 23 years.  

A recent Gallup study showed that in 1993 the average age was 57 and even as recently as 2010-2012 the age hovered at around 60.

But for many, even age 62 may be too early.  No doubt that the average age has creeped up, with the lack of a reliable program of saving/investment during their lives, and/or the Great Recession "mark-down," it's not hard to understand the "need" to work longer. 

And, there are for sure, workers who are working because they love their work or they feel more fully alive and involved when they are pursuing their passion so they've chosen to continue at their life's work. And, I think,  we can be relatively certain that the extra money doesn't hurt either. Also, I'd bet that as the percentage of total jobs moves more towards "technology" and less toward, manual labor, we wouldn't be surprised to see the age creep even more in the future, just as a natural outgrowth of the societal impact on work itself. 

Ironically, about the same time as the Gallup organization was asking about retirement ages, they were also asking the American public what their biggest financial fear was and as you might image, not having enough for retirement came in at the top of the its at 59%. The harmony between "working longer" and "not having enough for retirement" is almost scary, but, this too is not to be unexpected. 

So what's the answer?

I think in the last few years I've written more than a few blogs about changes that need to take place in the workplace, whether that's that we provide new incentives for increasing investments in saving for retirement, develop a newer/better retirement plan system or some other improvements (if you're old enough you can remember when your pension might have been 66% of your highest three years average earnings).

Surely we can do a much better job on financial education, an area where we do very little in relation to what we could potentially do. Teaching people how to handle and manage money is a skill that pays benefits for a lifetime. And middle school, yes, middle school, is a good place to start. 

I think that actually planning for your future also pays substantive dividends (no pun intended) and if possible or preferred, people should commit to working with someone who can help them understand the financial structure of working toward, to and through retirement. 

What passes my understanding is how frequently we seem to refer to the retirement problem as if there's no existing means to remedy it. Odd isn't it that when we talk about childhood obesity or obesity in general we can pretty quickly come up with "diet and exercise" as steps that should be undertaken to stem the tide on weight gain. 

Likewise, shouldn't the first thing that comes to mind when we're talking about providing for our own financial security be something like, "set your goals, have a plan..?"  

So, what's the problem?

Over the thirty years that I've been in the financial services profession, there's been the often used saying that "more people plan their vacation, than plan their finances" and from what I've seen that is a true statement. 

But the key to all this may lie in the fact that we CAN plan our vacation and if we CAN plan that, then we've got the appreciation/understanding/ability TO plan anything else.  So whey don't we?

There a a host of rationale and irrational reasons we don't and a series of blogs could be written explaining, validating or invalidating almost all of them in some way. 

In the interest of brevity, let's conclude on this thought. 

"If you don't know where you're currently situated on a map, you have little idea in which direction your next step should be."

Figuring out where you are doesn't take planning it takes quantification. Figuring out where to take the next step means you've been moved to action, an often unintended benefit of the "quantification" process. This is the nexus at which we cross from "quantify" to "plan." 

Even if you're not a planner, take the first small step and "quantify."  

Knowing where you're situated is seldom ever a bad thing, trust me on this one.

Interior Design Has Demonstrated Value

Ok, we're not talking here about your choice of furniture or your use of paint colors. Although, I must admit, I have a distinct personal passion for that topic. 

Rather, we're talking about something that I think should be important to us all.

Rather, we're talking about something that I think should be important to us all.

I can, I will, I MUST. 

I can, I will, I MUST. 

Positive Psychology has blessed us with a wisdom. For all our inherent efforts to obtain "happiness" based on our investment accounts, or our job/pay, or bigger home, the reality remains that even with the attainment of those things, happiness still largely eludes us. It is it seems, an immutable reality that happiness breeds better performance in every aspect of our life and happiness is an "inside-out" play, not the other way around. 

In a recent article on Huffington Post Jen Grisanti takes from the recent talk at by Positive Psychologist, Shawn Achor (you can and MUST view the video here) the knowing that "the external world is not the answer for happiness."

That is why in wealth management, we refer to it as "interior design." It's been our experience that the most financially successful clients are those who begin with the notion that they'll first decide what their lives would be like were they their happiest and then, match their financial goals to acheive that life. These are almost always, the most grounded investors, the least likely to panic, the least likely to "quit" when things are getting tough in the markets. They then, invariably wind up being the folks who manage to "get it right" the majority of the time; in markets when they should be and not out when they shouldn't be. 

They're successful not because of a special wisdom about finance or tax policy or the economy or the global financial crisis. They're successful because their goal is to build their lives and they're simply using their resources to meet that goal. 

If you, as we do, start with the focus on the happiest life your plans will be much better, your investments more based on common sense and your willingness and ability to withstand the "whirlwind" of financial news and the whims of the financial markets more centered. Afterall, isn't the plan to live the life you want more than to outperform the S&P 500?

I have to thank Justine Musk for posting this to her Facebook page. You can read Justine's blog at

I'd also highly recommend Shawn Achor's book, "The Happiness Advantage" which you can buy on Amazon or from your i

Shaken Not Stirred: The Math of Financial Success

The mathematics of personal finance are not only hard to get your head around, their damn near scary when

You probably spent more time planning this year's vacation than you have your finances. 

You probably spent more time planning this year's vacation than you have your finances. 

The mathematics of personal finance are not only hard to get your head around, their damn near scary when you're faced with the conundrum of which set of factors to consider. 

I'm not going to attempt to write a treatise on the nuances of Monte Carlo simulation or security coefficients, I'm going to keep this blog post short and to the point. 

The conversation has begun anew in the circles of academia and personal financial professional journals that confirms what we've known all along: what you spend likely has more to do with your success than you think. 

Tied inexorably to that last statement is the other focus of a lot of press, the return projections for the markets are a full 3% under historical norms taken by most standards, including and perhaps most importantly, those of individual investors. 

So there you have it. Put these two comments into a shaker, give it a go and when you pour it out what you get is a recipe for people spending more than they should on the premise that they'll earn more than they will. And so the spiral of having less the next time continues.  

Is it manageable, this spend/return equation? It is, but not all at one shot it's not. As the world changes and as returns change, so to must the math. The math is long and complicated and what's harder is that there are more than a few subjective inputs that go into constructing the framework. (Note: You shouldn't be developing the subjective framework, though clearly you should have input into it's components and it's design.)

This is where we make the case for Wealth Manager as guide, not map maker. Most consumers when considering the use of professional wealth managers default to the fact that no one can be all seeing and all knowing so why pay for advice that can't stand up over the test of time? The fact is; when was someone doing something about a problem ever better than someone doing nothing about it?

The reason that wealth management is both art and science is because an "exact science" it is not. But like any good guide, you start from the premise that you can get to the destination in any number of ways, the question is; which one will be most efficient given the details as they play out. 

Were it for the math alone, personal finance would be hard. The fact that the math changes as much as it does makes it even more difficult. 

All things being equal; when you contemplate your future don't lose sight of the fact that you make many contributions to the math, but perhaps the most important one is by deciding what to spend and why. While it's only one variable in a very long equation, it just might prove to be the most powerful one of all. And unlike the markets, you control it.